CA to buy Concord Communications

Computer Associates International plans to buy Concord Communications, which makes network service management software, in a deal worth $350 million, the companies said Thursday.

The deal, which includes $330 million in cash and the assumption of $20 million in debt, is designed to expand CA's presence in the global enterprise management market, as well as in fast-growing areas such as voice over Internet Protocol (VoIP) and wireless mobile networking.

"This strategic combination significantly advances CA's position in the high-growth network and systems management marketplace," John Swainson, CA's chief executive, said in a statement.

With the acquisition, CA will create an enterprise systems management business unit, the company said. That unit will be used to integrate Concord's operations. CA said it expects to retain the majority of Concord's 640 employees.

The acquisition is expected to close in June or July, depending on regulatory and shareholder approvals.

One analyst said the Concord acquisition will improve CA's competitive stance against other large players.

"From CA's point of view, this will strengthen their network management to better compete against HP," said Drew Brosseau, an analyst with S.G. Cowen.

He added that CA may find it more difficult to conduct similar network management acquisitions in the future, given that the pool of potential candidates is shrinking as the market consolidates.

But don't be surprised, Brosseau said, if CA rounds out its product portfolio with acquisitions in related network management sectors, such as network systems, storage and--as with the Netegrity deal--security management.